TECO Energy Group Retirement Savings Plan Summary Plan Description

Transcription

1 TECO Energy Group Retirement Savings Plan Summary Plan Description The Summary Plan Description (SPD) for the TECO Energy Group Retirement Savings Plan (the Plan ) and any subsequent Summaries of Material Modifications (SMMs) are available for viewing online through MyTECOnet or Hard copies are available by request at Participating Companies Clintwood Elkhorn Mining Company Gatliff Coal Company Peoples Gas System, a division of Tampa Electric Company Perry County Coal Corporation Pike-Letcher Land Company Premier Elkhorn Coal Company Tampa Electric Company TECO Coal Corporation TECO Energy, Inc. TECO Guatemala, Inc. TECO Partners, Inc. Material contained in this booklet is current as of January 1, 2011.

2 RETIREMENT SAVINGS PLAN TABLE OF CONTENTS HIGHLIGHTS...2 COMMON QUESTIONS AND ANSWERS...3 FINDING IT FAST...4 YOUR RETIREMENT SAVINGS PLAN...5 WHO IS ELIGIBLE... 5 WHEN YOU MAY PARTICIPATE... 5 AUTOMATIC ENROLLMENT... 6 HOW TO ENROLL... 6 NAMING A BENEFICIARY... 6 YOUR PERSONAL IDENTIFICATION NUMBER (PIN)... 7 YOUR PASSWORD... 7 HOW YOU CAN SAVE...7 PRETAX SAVINGS... 8 AFTER-TAX SAVINGS... 8 HOW MUCH YOU CAN CONTRIBUTE...9 YOUR PAYROLL CONTRIBUTIONS... 9 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT (USERRA)... 9 ROLLOVER CONTRIBUTIONS... 9 HOW SHOULD YOU SAVE? CHANGING OR STOPPING YOUR CONTRIBUTIONS SMART GOAL REEMPLOYMENT PLAN LIMITS ON CONTRIBUTIONS HOW THE COMPANY HELPS YOU SAVE THE FIXED MATCH THE PERFORMANCE MATCH WHEN THE COMPANY MATCH IS MADE YOUR RETIREMENT SAVINGS PLAN ACCOUNT DAILY VALUATIONS QUARTERLY STATEMENTS MAKING CHANGES HOW YOUR ACCOUNT IS INVESTED INVESTMENT CHOICES FOR YOUR CONTRIBUTIONS INVESTMENT CHOICES FOR COMPANY MATCHING CONTRIBUTIONS INVESTMENT ELECTIONS IF YOU DO NOT MAKE AN INVESTMENT ELECTION QUALIFIED DEFAULT INVESTMENT ALTERNATIVE (QDIA) YOUR INVESTMENT CHOICES YOU ARE RESPONSIBLE FOR YOUR INVESTMENT DECISIONS ESTABLISHING AN INVESTMENT PORTFOLIO YOUR INVESTMENT STRATEGY IF YOU NEED A LOAN i

3 AMOUNT/FREQUENCY OF LOANS COLLATERAL LOAN REPAYMENT AND INTEREST RATE HOW TO APPLY FOR A LOAN IF YOU NEED TO MAKE A WITHDRAWAL FROM AFTER-TAX SAVINGS FROM PRETAX SAVINGS FROM ROLLOVER CONTRIBUTIONS WHEN YOUR ACCOUNT WILL BE PAID HOW YOUR ACCOUNT WILL BE PAID APPLYING FOR YOUR ACCOUNT IF YOU DIE BEFORE YOUR ACCOUNT HAS BEEN PAID HOW YOUR PAYMENTS WILL BE TAXED DISTRIBUTION OF COMPANY STOCK FEDERAL TAXES ROLLOVERS QUALIFIED DOMESTIC RELATIONS ORDERS WHEN YOUR ACCOUNT BALANCE IS LESS THAN EXPECTED HOW TO APPEAL A DENIED CLAIM YOUR RIGHTS UNDER ERISA RECEIVE INFORMATION ABOUT YOUR PLAN AND BENEFITS PRUDENT ACTIONS BY PLAN FIDUCIARIES ENFORCE YOUR RIGHTS ASSISTANCE WITH YOUR QUESTIONS ADMINISTRATIVE INFORMATION FORMAL NAME AND TYPE OF PLAN PLAN RECORDS PLAN ADMINISTRATORS TRUSTEE LEGAL NOTICES PLAN IDENTIFICATION NUMBER EMPLOYMENT RIGHTS NOT IMPLIED FUTURE OF THE PLAN PROTECTION OF YOUR ACCOUNT APPENDIX A SPECIAL PROVISIONS FOR PARTICIPANTS OF PRIOR PLANS PEOPLES GAS SYSTEM, INC. EMPLOYEE PAYROLL SAVINGS PLAN MARTIN GAS CORPORATION 401(K) PLAN GRIFFIS GAS, INC. 401(K) PLAN APPENDIX B SPECIAL PROVISIONS FOR ESOP PARTICIPANTS DIVERSIFYING YOUR ACCOUNT DIVIDENDS LOANS VOTING RIGHTS ii

4 This Summary Plan Description (SPD) summarizes the legal documents that govern the TECO Energy Group Retirement Savings Plan. Every effort has been made to accurately describe the plan in this SPD. If there is a discrepancy between this SPD and the plan document, or if the plan is required to operate in a different manner in order to comply with federal laws or regulations, the plan document, or the appropriate federal laws and regulations, will control. TECO Energy Inc. intends to continue the plan indefinitely, but reserves the right to change or terminate it at any time. For example, the plan may be changed because of federal regulations, or it may be discontinued for business reasons. After government approval of the plan termination, your account would either be distributed in the manner explained in this booklet, or immediately in a single sum cash payment. TECO Energy, Inc., as Plan Administrator, has the exclusive discretionary authority to construe and to interpret the terms of the plan, to decide all questions of eligibility for benefits and to determine the amount of such benefits, and its decisions on such matters are final and conclusive. This summary contains information reflecting the TECO Energy Group Retirement Savings Plan restated as of January 1, 2007 and amendments through December 31, 2010 and applies to any subsequent plan year until amended. 1

5 HIGHLIGHTS The company sponsors the TECO Energy Group Retirement Savings Plan to give you an edge as you save for your future. If you were hired on or after January 1, 2011, and do not make an enrollment election or opt out of plan participation within 30 days of your hire date, you will be automatically enrolled in the plan, contributing 6% of your applicable compensation on a pretax basis and invested in the Vanguard Target Retirement Fund that most closely matches your retirement date based on an assumed retirement age of 65. To access your Retirement Savings Plan account by phone ( ), you will need your Social Security Number and your Personal Identification Number (PIN) which will be mailed to your home address as soon as administratively possible following your date of employment. The first time you call in, you will be prompted to select a new PIN as part of the account security process. If you can t remember your PIN, you can request it be mailed to you by calling the toll-free number. To access your Retirement Savings Plan account online ( you will need your User Name and Password. Your initial User Name is your Social Security Number and your initial Password is the month, day and year of your birth (MMDDYY). When you logon the first time you will be prompted to select a new User Name and Password and establish answers to several security questions as part of the account security process. If you have selected a new User Name and Password and later can t remember them, you can click on the Not sure about User Name? or Don t remember your Password? link on the login page and follow the prompts. You can save 1% to 50% of your applicable compensation through convenient payroll deduction. This means you pay yourself first, which is the key to saving money. The contributions you make each pay period can be made with pretax dollars, after-tax dollars or a combination of the two. The company matches a portion of your payroll contributions in two important ways o First, there is a fixed match equal to 60% of your contributions up to the first 6% you save through payroll deduction each pay period. o Second, there is an annual company performance match that may be made when certain business financial goals for your operating company are met. The performance match percentage can vary from 0% to a maximum of 40% for the plan year up to the first 6% you save through payroll deduction each pay period. You will enjoy tax advantages today while you are saving for tomorrow since pretax savings, company matching contributions and all investment earnings will not be taxed until they are paid to you in the future. You can access your account to meet shortterm needs through certain loan and withdrawal features. You can choose from a wide variety of investment funds; your choices include ready-mixed funds or you can pick your own combination of funds either way, you can design an investment strategy that can help you meet your personal goals. 2

6 COMMON QUESTIONS AND ANSWERS How much can I contribute to the Retirement Savings Plan? You can contribute up to 50% of your applicable compensation through payroll deduction. How much of my contributions will the company match? The company will match 60 for every dollar you contribute to the plan, up to the first 6% you contribute each pay period. The company may also make an annual performance match of between 0 and 40 up to the first 6% you contribute each pay period if your operating company s business financial goals are met. Can I make contributions to the plan other than through payroll deductions? You can roll over your funds from a previous employer s plan (including distributions from 403(b) and 457(b) plans) or an Individual Retirement Account (IRA). These roll over contributions are not eligible for company matching contributions. How can I keep track of my Retirement Savings Plan account s performance? Account information is available 24 hours a day seven days a week on the plan s website, A 24-hour automated telephone system is available by calling Mercer at Service representatives are available between 8:00 a.m. and 10:00 p.m. eastern time any business day. How do I know how much to contribute and which funds to invest in? You have to decide how much money you will need for retirement and which investment strategies will work for you. Consider your retirement goals, your other sources of income and what level of risk you are willing to tolerate. On page 17, you will find general investment strategies that might help. What if I need to take some of my money out of the Retirement Savings Plan? The goal of the plan is to help you build for a financially secure future, which is why you should leave your money in your account until retirement. However, the plan has loan (page 19) and withdrawal (page 21) features that provide you with access to your money under certain circumstances while you are working. 3

7 FINDING IT FAST YOUR SITUATION: How do I participate in the Retirement Savings Plan? HERE IS WHERE TO FIND IT: How To Enroll page 6 How do I name a beneficiary? Naming A Beneficiary page 6 Should I save on a pretax or after-tax basis? I am interested in contributing as much as possible. I had a 401(k) plan with my former employer. How can I transfer those funds to the Retirement Savings Plan? I want to change the amount of my contribution. How You Can Save page 7 How Much You Can Contribute page 9 Rollover Contributions page 9 Changing Or Stopping Your Contributions page 10 What investment funds are available? How Your Account Is Invested page 14 Can I get a loan from my account? If You Need A Loan page 19 How do I request a withdrawal? If You Need To Make A Withdrawal page 21 When will my account be paid? When Your Account Will Be Paid page 23 How will my contributions be taxed when I am ready to take a distribution? Who administers the Retirement Savings Plan? Where are legal notices served on the Retirement Savings Plan? How Your Payments Will Be Taxed page 24 Administrative Information page 29 Administrative Information page 30 4

8 YOUR RETIREMENT SAVINGS PLAN Saving for retirement can be a challenge, but it is a responsibility everyone should think about in advance. The sooner you start saving, the better off you will be. The company gives you an edge with the Retirement Savings Plan, a powerful tool that can help contribute to a secure financial future. WHO IS ELIGIBLE You are eligible for the plan if you are employed by one of the participating companies and not: Paid through a system other than the normal payroll process An individual for whom the company does not make Federal Insurance Contributions Act (FICA) contributions A member of a collective bargaining unit that does not participate in this plan Working for the company as part of an educational cooperative program A temporary or leased employee PARTICIPATING COMPANIES Clintwood Elkhorn Mining Company Premier Elkhorn Coal Company Gatliff Coal Company Tampa Electric Company Peoples Gas System, a division of Tampa Electric Company Perry County Coal Corporation Pike-Letcher Land Company TECO Coal Corporation TECO Energy, Inc. TECO Guatemala, Inc. TECO Partners, Inc. WHEN YOU MAY PARTICIPATE You are eligible to participate in the plan as of your first day of employment, so you can join the plan upon receipt of your personal identification number (PIN) following your date of employment. 5

9 AUTOMATIC ENROLLMENT If you were hired on or after January 1, 2011, and do not make an enrollment election or opt out of plan participation within 30 days of your hire date, you will be automatically enrolled in the plan, contributing 6% of your applicable compensation on a pretax basis and invested in the Vanguard Target Retirement Fund that most closely matches your retirement date based on an assumed retirement age of 65. HOW TO ENROLL You will receive your personal identification number (PIN) at your home by mail following your date of employment. To guide you through your enrollment, you will find an enrollment worksheet included in your enrollment kit. You choose: The percentage of pay, between 1% and 50%, that you want to contribute through payroll deduction The amount that you want to contribute on a pretax and/or after-tax basis The percentage that you want to allocate to each investment fund You can enroll by logging on to the plan s website at or by calling Mercer at If you did not receive an enrollment kit, you can request one from the Retirement and Savings Department or you can view it on the Human Resources website ( NAMING A BENEFICIARY Your enrollment kit will also contain a Beneficiary Designation form. You will use this form to name someone to receive your account if you die before your account balance has been paid to you. If you are married, your spouse is your beneficiary. To name someone other than your spouse as your beneficiary, you will need written spousal consent, witnessed by a notary public. (A space is provided for this purpose on the Beneficiary Designation form.) If you are thinking about naming a minor as your beneficiary, be sure you talk with a tax advisor before doing so. If you do not name a beneficiary, or if the person you name dies, your account will be paid to your surviving spouse, your surviving children or to your estate in that order. Use the envelope in your enrollment kit to return the Beneficiary Designation form to the Retirement and Savings Department. 6

10 You can change your beneficiary at any time if you have access to Employee Self Service ( or by completing a Beneficiary Designation form. Forms are available on the Human Resources website ( Your spouse will be required to provide notarized consent for you to name someone other than your spouse as any level of primary beneficiary. YOU HAVE IMMEDIATE OWNERSHIP IN YOUR ACCOUNT You are immediately vested, which means that you have a non-forfeitable right to your account. If you leave the company for any reason, you will receive the value in your account. YOUR PERSONAL IDENTIFICATION NUMBER (PIN) Your PIN will be mailed to your home as soon as administratively possible following your date of employment. If you were hired after January 1, 2011, your initial PIN is the month and year of your birth (MMYY). To access your account through the toll-free number you will need your Social Security Number and PIN. The first time you call in, you will be prompted to select a new PIN as part of the account security process. If you forget your PIN, call Mercer at , and ask the representative to mail your PIN to your home. For security reasons, you cannot get your PIN over the phone or the Internet. YOUR PASSWORD You will need your User Name and Password to access your account via the website, Your initial User Name is your Social Security Number and your initial Password is the month, day and year of your birth (MMDDYY). When you logon the first time you will be prompted to select a new User Name and Password and establish answers to several security questions as part of the account security process. If you have selected a new User Name and Password and later can t remember them, you can click on the Not sure about User Name? or Don t remember your Password? link on the login page and follow the prompts. HOW YOU CAN SAVE The plan offers you a choice in how you can save. You can contribute pretax dollars through the plan s 401(k) feature, which gives you immediate tax advantages, and you can also contribute after-tax dollars. To give you greater flexibility, you can contribute both ways. But no matter which way you contribute, investment earnings grow tax deferred until they are paid to you in the future. 7

11 PRETAX SAVINGS If you are taking advantage of the plan s 401(k) feature by contributing pretax dollars, you will make contributions before federal and state income taxes (if applicable) are withheld, but after Social Security taxes have been deducted. In this way your taxable income is lowered, and you will pay less in taxes today while saving for the future. AFTER-TAX SAVINGS When you contribute after-tax dollars, you make your contribution after taxes have already been taken out of your pay. Your investment earnings grow tax deferred until they are paid to you in the future. When you make a qualified withdrawal from your account you will not pay taxes on your contributions, but you will pay taxes on any investment earnings. See page 21 for more information on withdrawals from after-tax savings. PRETAX SAVINGS: AN EDGE YOU CAN TAKE TO THE BANK Contributing pretax dollars gives you an edge by lowering your taxable income today while you save for tomorrow. This chart compares contributing pretax and after-tax and shows how contributing pretax can mean more in your paycheck. We have assumed pay is $40,000, contributions are 6% and income taxes are a flat 25%. As you can see, you can increase your take-home pay just by contributing pretax dollars instead of after-tax dollars. In this example, your take-home pay is $600 higher by contributing pretax dollars, even though the same amount, $2,400, is saved. Contributing After-Tax Dollars: Contributing Pretax Dollars: Pay $40,000 6% contributions - 2,400 25% taxes on pay -10,000 Take-home pay $27,600 Pay $40,000 6% contributions - 2,400 Adjusted pay $37,600 25% taxes on adj. pay - 9,400 Take-home pay $28,200 Increase in take-home pay with pretax contributions: $600 Note: The flat income tax rate of 25% assumed for this example is hypothetical and is used for illustrative purposes only. 8

12 HOW MUCH YOU CAN CONTRIBUTE The best way to save money is to pay yourself first and pay your expenses with the remainder. This is how the Retirement Savings Plan works. You will make your contributions through payroll deduction, which allows the money to be put aside before it is factored into your takehome pay. Through payroll contributions, you can save from 1% to 50% of your applicable compensation each pay period in any whole percentage. You indicate the percentage of pay you wish to contribute each pay period. YOUR PAYROLL CONTRIBUTIONS You can contribute up to 50% of your applicable compensation to the Retirement Savings Plan. Applicable compensation is your total compensation (up to the government-imposed limits) as reported on your W-2 form, including pre-tax contributions you make to the Retirement Savings Plan plus any pre-tax contributions you make towards your other benefits programs. However, applicable compensation will not include reimbursed expenses, excess life insurance premiums, proceeds from the sale of stock options, deferred compensation, severance pay, moving expenses, stock-based compensation (other than stock-based compensation given in satisfaction of short-term incentive compensation payouts) or any forms of indirect compensation. Payroll contributions can be either with pretax dollars, after-tax dollars or a combination of the two. The first 1% to 6% you save each pay period through payroll contributions is eligible for company matching contributions. Amounts contributed over 6% are not eligible for company matching contributions, but investment growth on these amounts is tax-deferred until paid to you in the future. Remember that Internal Revenue Service (IRS) limits could affect the maximum amount you can contribute to the plan. See Plan Limits on Contributions on page 11 for more information. UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT (USERRA) Subject to certain limits, USERRA protects your right to reemployment after you return from qualified military leave and certain benefits while you are on qualified military leave. Contact the Plan Administrator for additional information about USERRA. ROLLOVER CONTRIBUTIONS You can roll over amounts you receive from an eligible retirement plan (including 403(b) and 457(b) plans) of a former employer to your retirement savings account. You can also roll over distributions to you as a surviving spouse or to you as a spouse or former spouse under a qualified domestic relations order. To roll over any of these amounts call Mercer ( ) to request a rollover kit. You must also contact your former plan s sponsor or administrator (your former employer or investment company) to request the forms that they require. You will continue to defer taxation on the amount that you roll over to the plan from a qualified source. 9

13 You can make a rollover contribution directly from an eligible plan or an Individual Retirement Account (IRA). You can make a rollover contribution even if you do not want to make deposits to the plan. Any rollover must be made within 60 days of the date you receive a distribution. If you miss the deadline, you will have to pay ordinary income tax and certain penalties on your distribution. Rollover contributions are not eligible for company matching contributions. HOW SHOULD YOU SAVE? When saving for the future, the right strategy gives you an edge. Here are some guidelines: When saving for retirement, it may be best to save with pretax dollars. With pretax dollars, you will not pay taxes until later, so your taxable income is lower today. You will pay taxes on your investments when you withdraw your money in the future, but by that time, you may be in a lower tax bracket. While you generally cannot withdraw pretax savings without penalties, you can take out a loan and pay yourself back with interest (see page 19 for details). Some of the IRS restrictions and penalties on withdrawals of pretax contributions do not apply to after-tax contributions. After-tax contributions can be withdrawn for any reason. For some people, a good strategy can be to combine pretax with after-tax savings. CHANGING OR STOPPING YOUR CONTRIBUTIONS You can increase, decrease, stop or restart contributions at any time. To do so, log on to the plan's website at or call the Mercer toll-free customer service number at between 8 a.m. and 10 p.m. eastern time any business day, or use the 24-hour automated voice response system. SMART GOAL The Smart Goal contribution increase option provides an easy way to save more for your future by systematically increasing your contribution rate every year. Simply choose the percentage by which you would like to increase your pretax and/or after-tax contribution each year and your preferred month for the increase to take place. Smart Goal will update your savings rate for you. You can participate in Smart Goal through the website ( or tollfree number ( ). 10

14 REEMPLOYMENT You can resume participation at any time following your reemployment by a participating employer. PLAN LIMITS ON CONTRIBUTIONS The Internal Revenue Service restricts the amount of pretax dollars individuals can contribute to the plan per year. For 2011 the limit is $16,500. Amounts over $16,500 must be contributed on an after-tax basis. After 2011 the limit will be adjusted periodically for inflation. In addition, if you are age 50 by the end of the calendar year, and have made the maximum pretax contributions permitted under the plan, you can contribute an additional amount on a pretax basis. For 2011, the maximum amount for these contributions (called catch-up contributions) is $5,500. After 2011 the limit will be adjusted for inflation. These amounts are not eligible for company matching contributions. Limits also apply to the amount of compensation that may be taken into account under the plan and to the amount higher-paid participants can save in relation to the amount saved by other participants. IRS rules also limit total plan contributions to the lesser of $49,000 (this is the dollar limit for 2011 this dollar limit is adjusted for inflation from time to time) or 100% of your total cash compensation. The company matching contributions will also count toward this maximum amount. The amount of annual pay that can be used to calculate contributions is limited. For 2011, the limit is $245,000. HOW THE COMPANY HELPS YOU SAVE When you are trying to reach a goal, help can give you the edge you need. The Retirement Savings Plan offers an edge to help you reach your goal. It provides an opportunity to enjoy taxdeferred growth on your contributions, and the company will match a portion of what you contribute. Since company matching contributions grow without being taxed until they are paid to you in the future, your money grows faster. There are two types of company matching contributions fixed and performance. THE FIXED MATCH The company will match 60 for every dollar you deposit into your account, up to the first 6% you contribute each pay period through regular payroll deduction. THE PERFORMANCE MATCH The company may provide an annual performance match based on whether or not certain business financial goals for your respective company are met. This amount will vary from 0 to 40 on the first 6% of pay that you contribute each pay period to the plan. You are eligible for this match as long as you are working for the company on the last day of the plan year. The performance match will also be made to the accounts of members who retire, become totally disabled or die during the year. 11

15 WHEN THE COMPANY MATCH IS MADE The fixed match is deposited into your account each pay period. The performance match is deposited into your account after the end of the year when your respective company s financial performance results are known. With the company match, investment earnings and your contributions, your account can grow quickly. How much your account will grow depends on: How much you contribute each year The performance of the investment funds you select Company fixed and performance match amounts Prior to July 1, 2004, the company made matching contributions in company stock through an Employee Stock Ownership Plan (ESOP). See Appendix B for special provisions that apply to ESOP participants. HOW YOUR ACCOUNT CAN GROW This chart shows an example to illustrate how your account can grow. Remember, it is based on certain assumptions. Your actual account growth will depend on decisions you make, including your contribution level, the performance of the investment funds you choose, and the level of company contributions. Assumptions: You earn $40,000 a year throughout the period and save 6% of pay. You receive the company s fixed match of 60 (this example does not include any potential performance match you may receive). The total investment return is 6% a year. 5 Years 10 Years 15 Years 20 Years 30 Years Your Contributions $12,000 $24,000 $36,000 $ 48,000 $ 72,000 Company Match 7,200 14,400 21,600 28,800 43,200 Investment Growth Total 3,126 _ $22,326 14,041 _ $52,441 35,462 _ $93,062 71,053 _ $147, ,245 _ $321,445 12

16 YOUR RETIREMENT SAVINGS PLAN ACCOUNT As a plan member, you will have a personal account. Separate records will be kept of: Your contributions, separated by pre- and after-tax deposits Company matching contributions (also includes contributions made by the company before the ESOP) ESOP matching contributions* (see Appendix B for special provisions that apply to ESOP participants) Any rollover contributions you have made Loan account Any TRASOP accounts*, including o Participant contributions o Employer contributions o Dividend transfer accounts Any excess vacation contributions (earned prior to January 1, 1997)* Individual Retirement Accounts (IRAs)* Note: *These contributions were made under prior plan features; new contributions of this type are not allowed under the current provisions of the plan. DAILY VALUATIONS At the end of each business day, the trustee will determine the fair market value of the assets in each separate investment fund. Before crediting your account or making investment transfers, any expenses not paid directly by the company and/or investment gains and losses since the prior business day will be credited or charged to your account. QUARTERLY STATEMENTS Quarterly statements show all transactions and the value of your account holdings. A statement will be mailed directly to your home as soon as possible after the end of each quarter (i.e., March, June, September and December) unless you have elected to stop receiving paper statements. Statements can also be viewed on-line at You can check your account balance at any time and elect to suppress generation of a quarterly paper statement on or by calling Mercer at

17 MAKING CHANGES IF YOU MAKE THIS CHANGE... IT WILL BE EFFECTIVE... Increase or decrease the percentage you are contributing Stop contributing Within two payroll cycles Within two payroll cycles Switch from after-tax to pretax or vice versa Within two payroll cycles Change the investment of future contributions Transfer all or part of the current value of your contributions or company contributions As of the date you make a change on or call to request a change* As of the date you make a change on or call to request a change* * Changes made after 3:30 p.m. eastern time will become effective on the next business day. HOW YOUR ACCOUNT IS INVESTED INVESTMENT CHOICES FOR YOUR CONTRIBUTIONS Your Retirement Savings Plan offers investment flexibility. Your contributions can be invested at your direction in any one or a combination of investment funds offered under the plan. Your investment decision affects two parts of your account the account balance and current contributions. INVESTMENT CHOICES FOR COMPANY MATCHING CONTRIBUTIONS Company (fixed and performance) matching contributions can be invested in any of the investment funds available. You can also invest them in the TECO Energy Stock Fund; a fund invested in common stock of the company. The TECO Energy Stock Fund is only available for company matching contributions. If you do not select a fund or combination of funds, your matching contributions will be invested in the same manner as your contributions. INVESTMENT ELECTIONS You can invest your contributions and company matching contributions in any whole percentage (from 1% to 100%). Since you can change your investment choices on any business day (subject to the procedures and limitations established by the plan and the individual investment fund companies), you have a great deal of investment flexibility. 14

18 At least one fixed income fund and at least one equity fund will be offered for the investment of the assets of the trust fund. The fixed income fund(s) will consist of assets that can reasonably be expected to have a fixed rate of return for a determinable period with a relatively low risk of loss. The equity fund(s) will consist of stocks, bonds and other assets that offer the potential for growth in value in addition to income and dividends. Adjustments from all of the funds that you are invested in, including gains and losses, will be allocated to your individual account as of the last preceding valuation date. You can access the prospectuses or offering statements online ( or request one be mailed to you ( ). They will describe fund goals and how they operate. You will receive a breakdown of the investment portfolios, the investment performance data, information on the value of the units of each investment fund offered and whom to contact for more information including investment management fees and operating expenses. Please review the fund information carefully. In addition, you can also log on to or call Mercer at between 8:00 a.m. and 10:00 p.m. any business day for fund information. The investment funds are designed with varying financial goals in mind that carry different levels of risk. They correspond with investor types. Generally, the investment funds with the highest potential for growth carry the greatest amount of risk: Growth Blend Value Income Capital Preservation AGGRESSIVE Higher Level of Risk/Potential Return MODERATE Moderate Level of Risk/Potential Return CONSERVATIVE Lower Level of Risk/Potential Return IF YOU DO NOT MAKE AN INVESTMENT ELECTION QUALIFIED DEFAULT INVESTMENT ALTERNATIVE (QDIA) Making an investment election is important because it helps keep your strategy in line with your goals for the future. If you do not select a fund or combination of funds for your contributions, your contributions will be invested in the age-appropriate Vanguard Target Retirement Fund with the target retirement date closest to when you reach age 65, which is the plan s default investment option. 15

19 YOUR INVESTMENT CHOICES The Funded Benefits Committee has selected several investment options (the funds ) that are offered as plan investments. Those funds have different investment characteristics and offer different levels of risk and return. For example, one investment option may invest primarily in common stocks of corporations, while another may invest primarily in bonds. You determine how your account is distributed among the investment options offered. Investment elections can include any number of the available options, but allocations must be in whole percentage amounts. If you fail to make any investment elections, amounts contributed to your account will be invested in a default fund selected by the Funded Benefits Committee. Additional information regarding each investment fund is contained in each fund s prospectus and other securities filings. Prospectuses and securities filings are not prepared by the Funded Benefits Committee. The Funded Benefits Committee assumes that such documents are accurate and complete. However, the Funded Benefits Committee does not have the ability to determine whether such documents are accurate and does not guarantee the accuracy of any prospectus or any other document created for the purpose of complying with Securities laws. In addition, as you direct your investments, you should be aware that many mutual fund families place restrictions on the number of times that you may trade within a fund over certain periods of time. You should carefully review the mutual fund prospectuses for information regarding trading restrictions and redemption fees that you may be charged should you violate these restrictions. In certain situations (for example excessive trading, etc.), there may be limitations regarding transfers. YOU ARE RESPONSIBLE FOR YOUR INVESTMENT DECISIONS The plan is an ERISA 404(c) plan, which means that the plan is intended to comply with Section 404(c) of ERISA and Department of Labor Relations c-1. By complying with this section of ERISA and these regulations, the plan s fiduciaries are relieved of liability for any losses that directly result from a participant s or a beneficiary s investment instructions. This simply means that you are legally responsible for your own investment decisions. ESTABLISHING AN INVESTMENT PORTFOLIO You should carefully consider how to invest the funds in your account. The available investment options offer varying degrees of risk and have different investment goals, so review each option before choosing where to invest your savings. To help you learn about each of the available investment options, information about each of the investment options has been made available to you. You should read this information carefully and make sure you understand it. The investment options offered generally do not guarantee preservation of principal. In other words, the value of your investments can go up or down. 16

20 After you read the investment information, you should analyze your personal financial situation. If you have many years to go before you retire, or if you have more than adequate retirement funds, you may want to invest in the funds that have greater risk but also greater potential for long-term returns. If you are risk-adverse or are closer to retirement, you may want to concentrate on funds that are less volatile and more conservative. You may want to consult your personal investment advisor about the best way to invest your account. The information provided to you (which may be provided in the form of a prospectus) will include: a description of each available investment option, including the investment objectives of that option; the types of assets in which the fund is invested; the risk and return characteristics of the fund; the name of any investment managers; a description of any fees or expenses that may be charged to your account; and a prospectus if the investment option has one. If, because of an oversight, you do not receive any of the materials listed above, please contact Mercer or the Retirement and Savings Department and the information will be provided to you. You also have the right to request additional information about each investment option. The information you may request includes: a description of the annual operating expenses of the fund to the extent that those expenses may reduce the rate of return of the fund; copies of any prospectuses, financial statements and any other reports about the fund that have been provided to the Plan Administrator; a list of assets held by the fund; information concerning the value of shares or units of the fund; and information regarding the historical investment of the fund, net of expenses. In deciding how to invest your retirement savings, you should take into account all of your assets, including any retirement savings outside of the plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerances for risk. YOUR INVESTMENT STRATEGY The plan gives you real savings power because you control how your investments are directed. As you create an investment strategy, remember that all investments have certain risks along with potential rewards. To help you plan, here are some approaches to consider: Diversify spreading your investments among different types of funds helps to balance your exposure to risk, while at the same time giving you a chance to share in meaningful growth. In this way, you balance risk and reward. For a one-step solution, consider using a single ready mixed fund (Vanguard Target Retirement fund). Each fund on its own is designed to diversify your investments. Think long term no matter what your age, start saving now. Leave your money in the plan for the long term, if possible, instead of making early withdrawals. If you take the money out, it will not earn investment income. Save regularly stick to your savings plan. It is better to save a little each payday than to stop and start when you think you can afford it. The 401(k) savings feature is your chance to pay yourself first through convenient payroll deduction. It also allows your contributions to grow tax deferred until you withdraw the money. 17

21 Have other sources make sure you can maintain your lifestyle through a combination of other income sources such as personal savings and investments. Also consider how much Social Security will add to your retirement income. Will it be enough to supplement what you will receive from this plan? Increase your contribution percentage if you are not contributing at least 6% the basis for the company match each pay period you are turning down free money. If possible contribute at least 6%. TYPES OF INVESTORS Each investor has an individual situation to consider such as planned retirement date, current and future financial commitments, etc. Even the most confident investor can be uncertain about how much risk to take. Finding an acceptable risk level is a personal decision one that only you can make. Before rushing into anything, think about how soon you will need your money, and how patient you are when riding out the market s ups and downs. To help you determine what kind of investor you are, here is a profile of the three most common investment types: Conservative Investor A conservative investor is willing to accept lower returns in exchange for less risk. Often the conservative portfolio will have stable values from year to year and little risk of loss. Some financial advisors recommend becoming more conservative the closer you get to retirement because you will have less time to recover if an investment loses value. Moderate Investor A moderate investor tries to balance risk and reward and usually has different types of investments. Being a moderate investor is not better than being a conservative or aggressive investor, rather it is an approach that works for someone who wants a balance. Aggressive Investor An aggressive investor is willing to accept more risk in return for a potentially higher return. The further away you are from retiring, the better this strategy will work for you because if an investment loses value, you have more time for it to recover. Ultimately the investment decisions you make are your own, and you may find that you are a combination of these investor types. Your decisions should be based on what best fits your circumstances and what will help you reach your own savings goals for retirement. 18

22 READY WHEN YOU ARE You can check investment performance, make transactions, and access your account information 24 hours a day, 7 days a week by logging on to the plan s website at or by calling Mercer at You can: Check your account balance Change your contribution rate Make transfers among investment funds on any business day (subject to the procedures and limitations established by the plan and the individual investment fund companies) Confirm your latest transaction Find out how much is available for a loan or withdrawal Request up-to-date performance figures and daily share prices of the funds available through the plan Request additional information about the investment funds If you need personal assistance, representatives are ready to answer your questions between 8 a.m. and 10 p.m. Eastern time, on any business day. The voice response system is available 24 hours a day, 7 days a week. It is recommended that you use either Internet Explorer (version 7.0 and above) or Firefox (version 2.0 and above) to access and view your plan s website. Using these browsers ensures a consistent display of page format and functionality. If your browser does not meet the requirements, you can download the latest version free of charge from its website. For more information about browsers, please see the plan s Site Help page. Note: To access your account information by phone, you will need your Social Security Number and your personal identification number (PIN); to access your account information on the Internet, you will need your User Name and Password. IF YOU NEED A LOAN You may need some of the money you have saved before retirement. That is why the plan is designed with a loan feature that lets you borrow from your account. Of course, it is best to leave your money in the plan to grow, but if you do take out a loan, you pay yourself back with interest. 19

23 AMOUNT/FREQUENCY OF LOANS You can borrow up to 50% of your account balance (up to $50,000) for any reason, but you cannot borrow more than you have available for withdrawal. The least amount you can borrow is $1,000 and the most you can borrow is $50,000. You cannot borrow from your matching contributions. You can have two loans outstanding at a time one personal and one residential. (You cannot have two personal or two residential loans outstanding at the same time.) If you had a loan balance during the one-year period before your next loan, the $50,000 maximum will be reduced by the highest loan balance during that one-year period. COLLATERAL The collateral for your loan will be 50% of your account balance. The plan s trustee will take a secured interest in your account. LOAN REPAYMENT AND INTEREST RATE You will repay your loan through payroll deduction. The repayments will include principal plus interest. The interest rate charged on your loan will be 1% above the current prime rate. The interest rate will remain fixed throughout the duration of the loan. Each payment will be credited to your account and will be invested according to your most recent investment elections. A $50 application fee will be charged to your account. If you are on leave for military duty, your repayment schedule can be delayed during the period you are serving in the military, up to the time limits set under USERRA. Contact the Retirement and Savings Department for more information on your USERRA rights. You can take from six months to up to five years in six-month increments, to repay the loan, or up to 10 years if the loan is for the purchase of your principal home. You can pay off the loan balance in full at any time without penalty. HOW TO APPLY FOR A LOAN You can get information on the maximum amount available to you for a loan, the plan rules for loans, and even model a loan on the plan s website ( or by calling Mercer at To apply for a loan, you will need to complete a Participant Credit Agreement and return it to the plan s service provider. If you are married, you will also need written spousal consent, signed and witnessed by a notary public, on file. (A consent form must be on file no earlier than 90 days before each loan is processed.) These forms can be requested by calling a Mercer representative at between 8 a.m. and 10 p.m. Eastern time on any business day. 20

24 Once all of the forms have been completed and returned, the loan check and a Truth in Lending Disclosure Statement will be sent to you within 7 to 10 business days from the date the loan is initiated. Residential loans require the approval of the plan s administrator before they are processed. If the loan is denied, you will be notified of the reasons. (Reasons for denial could include no signed Participant Credit Agreement on file, no spousal consent form, etc.) General Purpose Loans will be repaid through payroll deductions over a period of not less than 6 months or greater than 5 years. Primary Residence Loans will be repaid over a period no greater than 10 years. Loans that are not repaid in a timely manner will be considered in default. Defaulted loans will be reported as a taxable event for the participant. For terminated participants loans are considered a taxable event if not repaid in a timely manner. IF YOU NEED TO MAKE A WITHDRAWAL The plan was designed to help you save for retirement; however, you can make up to four withdrawals a year. To request a withdrawal, call Mercer at between 8 a.m. and 10 p.m. Eastern time, on any business day, at least 8 to 10 days in advance of your need. Before making a withdrawal, be aware that the IRS puts restrictions on withdrawing money from your pretax savings during employment and may impose a penalty tax. This is because of the tax advantages offered by the plan. Company matching contributions cannot be withdrawn while you are employed by the Company. FROM AFTER-TAX SAVINGS You can withdraw your after-tax savings in any amount for any reason, but you will be taxed on the part that is considered earnings. The IRS makes a distinction between contributions made before and after January 1, When you make a withdrawal from your after-tax savings account, the following applies: You can withdraw all of the after-tax savings contributions you made (excluding interest) before January 1, 1987, without paying income tax. You can withdraw after-tax savings contributions you made after December 31, 1986 (including all interest on your after-tax savings), but the IRS will require a portion of this withdrawal to be classified as earnings. The earnings portion will be subject to ordinary income tax, and the IRS requires the company to withhold 20% of the taxable amount of your withdrawal to pay for this tax. In addition, any withdrawal made before you are age 59½ may be subject to a 10% penalty tax, which only applies to the earnings portion paid to you. 21

25 FROM PRETAX SAVINGS The restrictions that apply to pretax withdrawals are based on your age. If You Are Under Age 59½ You can only withdraw money from your pretax savings when you have a financial hardship as defined by the IRS. A financial hardship is an unexpected, extreme financial need that cannot be met from any other source, such as: The amount needed to avoid eviction from your principal home or foreclosure of your mortgage The amount needed for a down payment on a principal home (excluding mortgage payments) Post secondary tuition (for instance, college tuition) and related educational fees for yourself, spouse or child A major medical expense for yourself, spouse, or dependent that is not paid by insurance Funeral expenses for parent, spouse, child, or dependent The amount needed to repair the damage to your principal residence caused by fire, storm, or other casualty The amount withdrawn will be subject to ordinary income tax and may be subject to a 10% penalty tax. Call Mercer at to request a hardship withdrawal and the appropriate form. The total balance of your after-tax savings, and loan options if any, must be distributed first. By law, you cannot withdraw the earnings on your pretax savings account. At the time of a hardship distribution, your contributions to the plan will be suspended for six (6) months. You may reactivate your contributions at the conclusion of the suspension period. If You Are Age 59½ or Older If you have reached age 59½ and you are still actively employed by the Company, you can make withdrawals from your eligible pretax savings account for any reason. Assets invested in any TECO stock (ESOP, TRASOP, Company match) are not eligible for an age 59 ½ withdrawal. Withdrawals after age 59½ do not require financial hardship. These withdrawals will be subject to ordinary income tax and a 20% withholding tax will automatically apply, but they will not be subject to a 10% penalty tax. FROM ROLLOVER CONTRIBUTIONS You can make a withdrawal from your rollover account, if any, while you are employed by the company. All funds withdrawn will be treated as ordinary income, and a 20% withholding tax will automatically apply. Funds withdrawn may also be subject to a 10% penalty tax. 22